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People with money and property sometimes choose that moment to change their wills or estate plans. Done right, death-bed revisions may save their families income and estate taxes and prevent misunderstandings and administrative hassles.

If not handled carefully, though, it can leave a will open to legal challenges that can drag on for many years, particularly if the late changes are sweeping or appear out of character.

Ideally, an estate plan is considered carefully when it's created and is regularly reviewed, so it won't need major death-bed changes. Still, financial advisers often are asked to tweak elements when a client nears death.

"Sometimes, clients can't come to a decision until faced with their own mortality," says Atlanta-based adviser
Scott Beaudin.
"But based on that poignant moment in time," he says, "it's possible to do things that optimize your planning."

Delayed Decisions

When the prospect of death becomes real, it also may change a person's views on how, and how much, to give to various individuals, or to charity.

Janusz Kapusta

Mr. Beaudin recently helped a 48-year-old man amend his will after the client was given 10 days to live. Though the man had long had cancer, he had been expecting to live a longer time. Then he took an abrupt turn for the worse, the financial adviser recalls.

With the help of Mr. Beaudin and a lawyer, the man quickly set up a trust to hold $1.5 million in death benefits from an insurance policy, to provide for his wife and children. The trust gave his wife the option of managing its assets on her own, or letting a trustee do so.

The client also changed the guardian he had named for his children, aged 12 and 14 years. He considered the new designee a better choice to take over should his wife die while the kids were still minors.

"He had a simple 'I love you' will, and they were able to clean it up with a few amendments," says Mr. Beaudin, an adviser with Pathway Financial Advisors.

If someone in the dying person's family becomes involved in making late changes, it is critical that they have a power of attorney or similar document, to ward off legal challenges.

"Normally, it's the relative of a client who calls and says, 'My father just had a stroke, can you help me?' " says
Barry Kaplan,
a wealth manager at Atlanta-based Cambridge Wealth Counsel.

Mr. Kaplan helped a client's son with that authority set up two $50,000 funds to provide money to charities and reduce the estate's tax liability, with money from his father's estate.

Mr. Kaplan also has pointed out to some client families the tax benefits of giving certain assets, such as stocks, to a loved one before the owner dies. One man held a big position of a tech stock that had done poorly. Giving his wife the stock before he died would let her take advantage of the losses to offset gains she had from other securities.

Death and Taxes

Issues like taxes and the cost basis of an investment are complicated enough in normal times, and many people don't think about them when dealing with a death in the family.

Still, last-minute changes require special caution. Mr. Beaudin recalls spending two years helping a client contest his 91-year-old father's death-bed will, which left all $1.25 million of the elderly man's estate to a caregiver who hadn't even been mentioned in an earlier version. In a settlement, the client agreed to give a small portion of the estate to the caretaker, but gained most of the estate.

To avoid a challenge to such changes, a medical or mental competency examination can prove invaluable, notes
Michael Puzo,
a partner in the Boston office of law firm Hemenway & Barnes LLP. Still, he cautions against too many substantive changes at the eleventh hour.

Says Mr. Puzo, "Typically, it's a b-a-d time to change a will."

Ms. Dale is a reporter for The Wall Street Journal in New York. She can be reached at arden.dale@wsj.com.

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